Board member liability is a potential consequence of not having a reserve study.

• A. Not sure
• B. Depends
• C. True
• D. False

Answer: (C)

Not having a reserve study exposes the board to liability because it ties directly to the duty of care and prudent management that board members owe to the association and its members. A reserve study maps out anticipated major repairs and replacements for common areas, estimates costs, and sets a funding plan over time. This helps ensure the association actually has the money set aside when large capital needs arise, rather than springing huge, sudden assessments on owners or letting important systems deteriorate.

When a reserve study is not used or funds are neglected, decisions about maintenance and budgeting can appear reckless or negligent. If a significant repair is deferred or underfunded and problems occur—such as water damage, structural issues, or safety hazards—owners can allege that the board failed to exercise due care and to act in the association’s best interests. In many cases, having a documented reserve study strengthens the board’s position by showing they followed a reasonable, informed plan, and it can help limit liability or prove prudent management.

Even if a reserve study isn’t mandated by every jurisdiction, it’s widely regarded as best practice because it provides tangible evidence of responsible stewardship and helps protect against financial surprise and decline in property value. So the statement is true: not having a reserve study can lead to board member liability.